Arguments in favour of moving to a flat deduction system included the growing complexity, cost of administering the system and investigating false claims.

Speaking against the change was ATO lawyer Ram Pandey, who said it would be "the equivalent of detonating a nuclear device over North Korea". "Not a good option," Mr Pandey was quoted as saying.

"You have to remember that our system is integrated. It's not just about work-related expenses. If you go and ratchet around with one part of the system, you're going to create unintended consequences."

He argued the current system was "fair", and the main problem was a lack of understanding by the general public. "There are fundamental and compelling reasons for retaining the current system of work-related expenses," he said.

"Of course it requires some change. It requires enforcement. It requires education. It's not a problem with the system. It's a problem with a lack of education. The system itself is robust. The principles are clear. You cannot say that this is a free for all for everyone. The High Court has been pretty tough about some things.

"This idea that income is taxed on what is earned net of costs is as close to a fundamental right as you are going to find in our income tax system. That's why we have work-related expenses. That's one of the most compelling justifications for having it, it's fair. You tax what is earned net of costs."

He added that as the economy changed and people were forced to re-skill, being able to claim self-education expenses as tax deductions would be vital. "The jobs of the future are going to require people to educate themselves to change careers," he said.

"The way to go is to enhance, tweak and perfect our system of work-related expenses. There are things you can do before you have to exercise the nuclear bomb."

Arguing for the change was Joanne Dunne, director at accounting firm PwC, who described the current system as "out of control". "The impact on the tax base is growing as claims grow. Claims are increasing by three times the rate of GDP," she said.

Earlier this year, ATO commissioner Chris Jordan said more than $22 billion was claimed for work-related expenses in 2014-15, warning that even though individual amounts over-claimed was "relatively small", the overall revenue impact was "likely to be bigger" than the $2.5 billion in unpaid corporate tax by big business.

Mr Jordan said a "startlingly" large number of people were effectively gaming the system. About 6.3 million people made claims against clothing expenses in 2014-15 totalling almost $1.8 billion.

"That would mean that almost half of the individual taxpayer population was required to wear a uniform or protective clothing or had some special requirements for things like sunglasses and hat," he said in a speech to the National Press Club.

A Treasury submission last year to a now-lapsed parliamentary inquiry into tax deductibility argued Australia's system for work-related deductions was "relatively generous" compared with comparable countries, which were "more proscriptive or limited".

THINGS YOU PROBABLY CAN'T CLAIM

• Trips between home and work - unless carrying bulky work-related goods

• Car expenses that have been salary sacrificed

• Meal expenses for travel unless you were required to work away from home overnight.

• Private travel or private transport of bulky goods or equipment

• Everyday clothes to wear to work - such as a suit or black pants - even if your employer requires you to wear them

• Deductions for cleaning eligible work clothes without showing how you calculated the cost

• Higher education contributions charged through the HELP scheme

• Self-education expenses if the study is not connected with your current job

• Private use of phone or internet

• Upfront deductions for tools and equipment costing more than $300 each. These must be depreciated over time